The Bombay high court reprimanded banks and said they cannot simply “cut, copy and paste” orders declaring accounts as “defaulter” or “fraud”, while hearing industrialist Anil Ambani's plea challenging Union Bank of India's order passed on October 10, 2024, declaring his account “fraud”.
A division bench of Justices Revati Mohite Dere and Neela Gokhale directed Ambani to approach the Reserve Bank of India (RBI) to challenge the order, news agency PTI reported.
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“There cannot be such cut, copy and paste orders. There has to be some application of mind. Ultimately this is public money. We cannot have such orders passed in such a casual manner. There has to be some mechanism put in place,” PTI quoted the court as saying.
Anil Ambani had claimed that he was not granted any hearing before the order was passed for his account by the Union Bank of India.
He challenged two show-cause notices issued by the bank and asked for copies of the documents on which the bank relied before passing its order. He claimed no documents were furnished.
{{/usCountry}}He challenged two show-cause notices issued by the bank and asked for copies of the documents on which the bank relied before passing its order. He claimed no documents were furnished.
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The court noted that it was repeatedly coming across cases where banks declare accounts as ‘fraud’ or ‘wilful defaulter’ without following the guidelines laid down by the RBI. Banks have to be mindful of the fact that guidelines, published in the RBI's `master circulars', are in place, the HC said.
The court also directed the RBI to put a mechanism in place to ensure that such orders are not passed without analysis by banks. "We feel this is being done deliberately. There has to be some checks and balances, otherwise this will go on," it said.
Senior counsel Venkatesh Dhond, appearing for the RBI, said any aggrieved person can lodge an online complaint with the RBI if they feel that a bank order violated the principles of natural justice.
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Advocate Dhond, however, clarified that the RBI will not go into the merits of the case after a complaint is filed, but only see if mandatory procedures were followed before passing the order.
The court accepted his statement and asked Anil Ambani to lodge a complaint with the RBI. "Let the petitioner upload his complaint. Let us start with that," the HC said.
The court also directed the Union Bank of India to file its affidavit in response to Ambani's petition, and posted the matter for further hearing on March 13.